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This week’s roundup includes news of a drop in prices in the London property market, growing concerns over increasing debt for the UK’s poorest households, suggestions that the Open Banking policy will revolutionise consumer banking and further tightening among lenders on the number of loan approvals.

London home-sellers cut prices by highest level since 2009

People who are looking to sell their homes in London dropped the asking price for their properties by the highest level since the financial crisis, new figures have revealed.

At a time when prices in most of the rest of Britain are rising, Rightmove said the average asking price for a home in London stood at £600,926 in January, 3.5% lower than January 2017 and the biggest drop since June 2009.

Most of Britain experienced year-on-year increases in asking prices of 4% or more, and the average asking price for the rest of the country stands at just under £300,000.

London’s property market has slowed over the past 12 months due to higher purchase taxes on expensive homes, along with the June 2016 Brexit vote, which significantly impacted demand from foreign buyers and raised concerns over job losses in the City.

Debt fears ‘remain for poorer households’

A third of the lowest-income households in Britain have loans and credit card debts that outstrip the value of the assets they hold, new figures have revealed.

According to the Institute for Fiscal Studies (IFS), a quarter of very low-income households have high debt repayments or are behind on bills or repayments. Unsecured borrowing, such as loans, overdrafts and credit cards, has been rising by nearly 10% every year in the UK.

The report found that around half of British households have some unsecured debt. The IFS said 43% of this is loans from banks and other financial institutions, while credit and store debt account for 25% and purchase debt stands at 21%.

More than 60% of unsecured debt is held by households with above-average incomes, the IFS said, but many households are already behind on making debt repayments.

The IFS said young adults in their 20s were more likely to be in households with problem debt than older people, and low-educated young adults were particularly likely to be struggling.

Open Banking ‘revolution will challenge banks’ dominance’

A fundamental shift in the way consumers can bank, manage and spend their money digitally is currently under development. A change in the law, and the start of the Open Banking system, means people can allow businesses other than their bank to access their financial data.

The UK’s Competition and Markets Authority, which launched the scheme, said the new system will allow consumers to seek out better deals, including cheaper overdrafts and the ability to speed up the account switching process.

As part of the legislation, surcharges for payments made by credit card, debit card, or other payments, such as PayPal, will be banned. A change in UK law now means that banks and building societies must allow regulated businesses access to a customer’s financial data, but only if the customer has given permission.

The Open Banking system should ensure that such access is given by the UK’s nine biggest current account providers in a secure way, and without the need for customers to reveal their online banking login details or passwords.

UK lenders ‘tighten grip on consumer loans’

British lenders are planning to tighten their grip on consumer lending even more, a Bank of England (BoE) survey has revealed.

According to the central bank, expectations among lenders about the availability of unsecured lending over the next three months pointed to a sharp slowdown in credit.

Households across Britain are under pressure from rising inflation since the Brexit vote in 2016, coupled with weak wage growth.

It comes after separate BoE data showed British consumers had increased their borrowing by the smallest amount since mid-2015 in the three months to November 2017, adding to signs that households are slowing down their spending.

Lenders in the BoE survey said they expected to reject the biggest share of unsecured consumer loan applications since the fourth quarter of 2008. 

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